LAKE COUNTY — Sutter Lakeside Hospital”s (SLH) application to get designation as a critical-access hospital (CAH) has been approved by the state. Accreditation approval is expected in March. The status would increase the Medicare reimbursement rate but also cut the number of inpatient beds from 69 to 25.
Rural hospitals across the country with less than 100 beds are being forced to either close or seek CAH designation in order to cover operating expenses.
Sutter Health, SLH”s corporate parent, can subsidize unprofitable hospitals to an extent, but after pouring more than $62 million into capital projects since 1996, and with SLH”s profit during that 10-year time frame less than $10 million, that trend of subsidizing needs to stop, said SLH CEO Kelly Mather.
“We have been subsidized. That is what they do to help us out. But it is the expectation that each hospital make enough to cover operating costs. We have not been covering operating costs,” Mather said.
For every five patients Sutter admits, only one pays enough to cover SLH”s costs. This is due to the high number of Medicare and charity patients, Mather said. “With critical-access, five out of five patients will cover costs. We can accommodate between 96 to 98 percent of patients with this status.”
SLH”s parent Sutter Health had a net income of $553.7 million in 2006, an increase from $408.4 million in 2005. That income is for hospitals only, and does not include the revenue from other sources, such as home health agencies owned by Sutter Health, according to Kenny Kwong of the California Office of Statewide Health Planning and Development (OSHPD). SLH has $61 million in expenses and revenues of $62 million. The other options besides gaining CAH status are reduction of services, including outpatient and physician services and closing services that suffer serious loss of funds such as ER, OB and/or inpatient services.
Jim Araby, lead organizer with United Health Workers says the union is trying to put a stop to SLH seeking CAH status. “When they (Sutter Health) cry poor, you have to ask why they”re saying they can”t operate this hospital here when they”re making profits. There”s an urgency surrounding this issue, it”s in the final stages of approval,” Araby said.
Mather said hospital administrators operate under an agreement that the hospital will cover its own expenses. “It”s not expected that Sutter Health will subsidize health in any community,” Mather said.
“Ethically, we have a commitment to stay in business and to keep as many services open as we can?We have a responsibility to pay our employees at a competitive market rate, and upgrade and enhance our equipment,” Mather said.
Since 2001, Sutter has spent $30 million on a new emergency surgery department, imaging department and family medicine clinic and plans to add an electronic health record in the next couple of years, SLH spokesperson Mitch Proaps said.
Mather said SLH has been working on a bed demand analysis based on market data and community growth. “Between Redbud and Sutter, we have the exact number of beds we”re going to need in the future,” Mather said. Redbud, the only other hospital in the county, is already a critical-access hospital limited to 25 inpatient beds.
In the event of a disaster, such as a widespread flu epidemic, the hospital has a contingency plan that would accommodate an estimated 70 to 75 people, Mather said.
Mather said the CAH plan has support from Assemblymember Patty Berg. Berg in October wrote a letter supporting SLH”s critical-access application stating, “Sutter Lakeside faces some significant fiscal challenges. Hospital administrators struggle with the twin realities of a small patient population and rising operating expenses.”
Interestingly, Berg also applied her signature to a December letter from Senator Pat Wiggins” office stating, “This (bed size) reduction will not only compromise and place an unnecessary burden on Lake County residents and quality healthcare services, but will also increase the amount of patient transfers to other counties, such as Sonoma.”
Berg”s spokesperson Maria Aliferis-Gjerde said Friday Berg preferred not to comment on SLH, and suggested referring to the letter-writer Wiggins for an opinion.
Wiggins said Friday, “As a not-for-profit hospital chain, Sutter receives significant public tax subsidies, and it would be wrong for these changes to occur at Lakeside absent a complete impact analysis that can be reviewed by local and state government. And any changes in services that do occur should only be made after conferring with all agencies responsible for public health and safety.”
Wiggins added, “Those discussions require data and analysis, not vague reassurances that there are no adverse consequences to the reduction of hospital beds at Lakeside.”
Mather said in February, the hospital plans to meet with the public and the Board of Supervisors. She added that for the past three months, the hospital has been engaged in a study of the community”s health care needs related to critical-access status. The study is conducted by Sutter.
“At this point we”re planning on using this gift of CAH to stabilize us and help us meet the needs of the community, which we are meeting and continue to meet,” Mather said.
Lake County Supervisor Tony Farrington said, “I”m concerned that the downsizing of Sutter hospital will place a huge burden on our local fire departments in terms of the number of transportations that will take place both in the county between the two hospitals and as it relates to transportation to other facilities outside the county.”
Proaps said, “This is a very complex issue…Once it”s out on the table and people see exactly what we”re planning, they”ll begin to see that this is a good thing for our community.”
Contact Elizabeth Wilson at ewilson@record-bee.com
